Our previous blog post introduced Regional Transmission Organizations [RTOs] in the electric power industry.
Think of RTOs as traffic cops of the grid. On the road police don’t say what color vehicles or kinds of cars can use the road, or what road drivers use to approach the intersection. The cop makes sure vehicles efficiently move on their way.
Seven RTO or similar large organizations are in the US. (Source)
RTOs do this:
- Manage the regional bulk power transmission system
- Keep supply and demand in balance
- Are neutral market-makers
- Ensure fair access to transmission systems
- Monitor markets to avoid manipulation
Vertically-integrated utilities – companies that do everything from make power to get it to your house – do this in some places where no RTO exists, with a few tweaks.
RTOs do not do this:
- Dictate the kinds of generation (e.g., coal, wind, nuclear)
- Tell distributors who should get the power or at what price
- Make energy policy
- Sell to retail customers (homes, schools, manufacturers…)
- Own physical assets like generating plants or power lines
- Take positions in the markets
- Operate as a consumer watchdog
There are debates about RTOs, too. A report done for the Sierra Club and National Resource Defense Council said that one RTO, called PJM, based in Pennsylvania, has problems. The major claim was that the RTO over-bought the amount of energy it needs.
From the report: “This over-procurement has direct and indirect negative consequences for PJM Region consumers and PJM’s wholesale electricity market. It results in consumers paying for more capacity than needed, retaining older capacity that is no longer needed and should be retired, and acquiring new power plants that are not yet needed.” Were consumers paying for too much energy? (Read the report to reach your own conclusion.)
A lot of implications in just a little text there. The upshot from a Carolina perspective is to ask if consumers could pay for more power than they need, and whether a desired mix of power plant types is hindered by the RTO.
Another issue, some in the Carolinas might have no desire to cede authority to a regional entity. There are those who do not look beyond state lines.
No RTO manages the Carolinas, as noted. Coordination does happen in the Carolinas. Duke Energy and Dominion Energy perform important roles and coordinate with coops. They operate according to strict rules from the Federal Energy Regulatory Commission (FERC).
That is the crux of the debate in North and South Carolina: If coordination is happening right now, why start an RTO?
Maybe the RTO idea is being floated in the Carolinas because of high-profile events like canceled nuclear plants in South Carolina or shortfalls in some utility leadership. Politics. Or something else.
A Carolina RTO would not:
- Dictate the final cost to homes and businesses
- Create more carbon-free power
- Get rid of Santee Cooper financial problems
- Update power plants or transmission lines itself
Suggesting an RTO without real root-cause thinking about energy issues is a solution looking for a problem.
Raise the debate above politics and one-liners. Engage in a solid discussion about:
- What serves consumers with affordable, resilient, safe, and clean power for the long term.
- How to continually improve service at a time when technology is racing ahead.
ECC does not say an RTO should or should not be the answer. ECC says that stakeholders in this discussion need to know what an RTO does and does not do and carefully define the energy issues to address. Otherwise, wrong answer for consumers.
Energy Primer – A Handbook of Energy Market Basics, from the Federal Energy Regulatory Commission.